Pending home sales jump higher in October — will the new COVID variant boost the property market?
The numbers: Contracts soar
The number of homebuyers who signed a deposit to buy a home in October increased markedly, far exceeding the expectations of economists.
The National Association of Realtors reported Monday. Economists polled by MarketWatch had expected October pending home sales to rise 0.7%.
Compared to last year, pending home sales fell 1.4%, reflecting home buying activity that has cooled from last year’s breakneck pace.
The Pending Home Sales Index measures real estate transactions where a contract has been entered into for a previously owned home, but the sale has not yet closed and it is assessed by activity. contracted in 2001. This index provides insight into the direction existing home sales figures will take in the coming months, based on closed transactions.
“Driven by rapidly rising rents and expected mortgage rates to rise, financially sound consumers will sign on to a home purchase contract sooner rather than later,” said Lawrence Yun, chief economist at the U.S. Securities and Exchange Commission. National Association of Realtors, said in a report. “This solid purchase is testament to the fact that demand remains relatively high, as it is happening at a time when inventories are still markedly low.”
The report noted that every region saw an increase in sales, led by an 11.8% increase in the Midwest. Yun added that the report reinforces predictions that existing home sales will exceed an annual rate of 6 million in 2021.
The pending drop in sales in September raised questions about the existing home sales report released last week, as that report showed increased sales. The Pending Home Sales Index is considered the leading indicator for existing home sales, but the October report may have addressed many of those questions.
While sales are still happening at a brisk pace, especially in the fall, most economists predict that momentum will slow next year, especially if mortgage rates rise as expected. ants.
Going forward, the trajectory of the housing market may depend on what happens to the Omicron variant of the virus that causes COVID-19. It is not yet known how transmissible the new variant is, nor if it increases the likelihood of more severe COVID-19 cases that can lead to hospitalization or death. If the variant proves to be a greater threat – and if it evades the protections provided by vaccines – then policies may have to be introduced to limit infection rates.
The real estate industry has adapted in many ways to provide more flexibility, so a similar slowdown is unlikely at the start of the pandemic. However, if the new variant does hurt consumer confidence, it could lead some to be second-guess buyers about their home buying decision.
What are they saying?
“As we head into fall, housing remains competitive, with scarce inventories and a quick turnaround, even as interest rates rise,” said George Ratiu, director of economic research at Realtor.com. Mortgage is up 15 basis points for the month,” said George Ratiu, director of economic research at Realtor.com. “The real estate market has left the spring of 2021 too hot, as an increase in the number of homeowners willing to move on with plans delayed by the pandemic spurred new listings and controls. at a dizzying rate of price increase.”
https://www.marketwatch.com/story/pending-home-sales-surge-higher-in-october-will-the-new-covid-variant-trip-up-the-real-estate-market-11638198301?rss=1&siteid=rss Pending home sales jump higher in October — will the new COVID variant boost the property market?